Everyone loves a good urban legend or story but when it comes to collecting the money owed to your company, don’t fall victim to these popular accounts receivable management myths.
MYTH #1: MY ERP OR ACCOUNTING SYSTEM HAS EVERYTHING I NEED FOR ACCOUNTS RECEIVABLE MANAGEMENT
While your ERP or accounting system might have an accounts receivable module, they notoriously lack the functionality, control, insight, and automation required to support the accounts receivable management process. ERP simply were not built for accounts receivable mangement; some of the major issues with managing A/R in your ERP module include their inability to handle disputes and dispute resolution, the need for additional dependent modules, the lack of sophisticated reporting, the need for outside applications and spreadsheets to fill functional gaps, their inability to automatically update account information, and extreme process and workflow inefficiencies.
Many experts in the field of credit collections are of the opinion that ERP systems are unable to support the invoice-to-cash workflow and meet the needs of an accounts receivable professional for fast and effective collections. Industry analysts PayStream Advisors agree that, “ERP solutions are woefully inadequate in terms of receivables and collections management (RCM) functionality.”
MYTH #2: MY COMPANY DOES NOT HAVE A PROBLEM WITH COLLECTIONS
If you offer credit terms then you probably have an accounts receivable collections problem and you don’t even realize the negative impact that it’s having on your bottom line and your cash flow.
Most companies sell on 30 day credit terms, but if you analyze your average days-to-pay (ADP) or days sales outstanding (DSO) you’ll probably be shocked to find that customers are taking a lot longer to pay their bills. In fact, most companies take between 45-60 days to collect on invoices. By developing accounts receivable KPI’s you can keep an eye on your accounts receivable performance and give yourself insight into potential problems before they become a reality. When was the last time you sat down and analyzed your accounts receivable performance? Here are 4 quick ways you can see where you stand.
MYTH #3: ACCOUNTS RECEIVABLE MANAGEMENT IS EASY
Managing accounts receivable is much more than sending out an invoice and recording payment. For each and every invoice a company sends out collectors must work through a long list of activities including invoice creation, delivery, confirming receipt, running and analyzing aging reports, sending reminder letters, sending past due notices, calling customers, scheduling calls, taking notes on accounts, recording payment, settling disputes, and so much more. Accounts receivable is truly a huge job and its critical to a company’s cash flow, but many do not have the resources or the time to manage collections proactively, efficiently, and effectively. Accounts receivable management software can help collectors automate their most time consuming and repetitive tasks so they can focus on collecting invoices, not updating spreadsheets or hunting through emails for information.
MYTH #4: WE’RE NOT THE PROBLEM, IT’S OUR CUSTOMERS
Your customers know they have to pay you and a majority of them want to pay you on time but there is something going on behind the scenes keeping them from doing that. You won’t like to read this…but often times the company collecting the invoice is the problem. In fact, 46% of late payments are late because of administrative errors, not a customer being unwilling or unable to pay. Your customers have many other vendors that they deal with on a daily basis so if you are not making it fast and easy for those to pay you, then you’re setting yourself up.[vc_row][vc_column][vc_cta h2=”THE ROI OF ACCOUNTS RECEIVABLE SOFTWARE” txt_align=”center” color=”turquoise” el_width=”xs” add_icon=”bottom” i_type=”entypo” i_icon_entypo=”entypo-icon entypo-icon-doc-text” i_color=”grey” i_background_style=”rounded” i_background_color=”turquoise” i_size=”xl” i_on_border=”true” i_link=”url:https%3A%2F%2Fanytimecollect.com%2Froi-accounts-receivable-software%2F|||”]
Find out how much time and money you can save with accounts receivable automation.
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